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UK government electricity levy petition - Remove environmental taxes from electricity to encourage heat pump installations

 
Electricity, Tariffs, Monitoring & Providers
Last Post by Mike Patrick 5 years ago
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Mars
 Mars
(@editor)
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Posts: 4298
Topic starter 21/06/2021 7:39 am  

The UK imposes social and environmental levies of 23% on electricity, but less than 2% on gas. These levies are actively working against the decarbonisation of heat in the UK. Government needs to migrate the levies from electricity to gas to allow people to run heat pumps with a financial advantage. As things stand, it is cheaper, in many instances, to use polluting fossil fuels. Improving the financial case for homeowners and landlords to adopt heat pump technologies will mitigate against climate change, improve urban air-quality, and will encourage the long-term supply chain for heat pumps. Using heat pumps to harvest on-shore thermal resources reduces fossil fuel imports, so contributing to both fuel security and to the UK’s balance of payments.

The UK cannot hope to achieve 600,000 heat pump installations a year by 2028 until it reduces the artificially inflated cost of increasingly clean electricity. To support the case, sign the petition by clicking on the link and adding your signature: petition.parliament.uk/petitions/588159 and please do share widely to encourage as many signatures as possible.


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Morgan
 Morgan
(@morgan)
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22/06/2021 6:05 am  

Signed.


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 Kev M
(@kev-m)
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Posts: 1276
22/06/2021 8:49 am  

While I would personally love cheaper electricity, I'm not sure eliminating electricity levies is either the right thing to do or likely to happen.  Surely we need to keep encouraging green electricity.  I would rather see extra levies put on gas to even up the price and any extra revenue generated used to subsidise insulation, etc.   I think that will be more effective and also more likely to happen.  It won't be popular though ... 



   
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Mars
 Mars
(@editor)
Illustrious Member Admin
Joined: 5 years ago
Posts: 4298
Topic starter 22/06/2021 9:31 am  
Posted by: @kev-m

While I would personally love cheaper electricity, I'm not sure eliminating electricity levies is either the right thing to do or likely to happen.  Surely we need to keep encouraging green electricity.  I would rather see extra levies put on gas to even up the price and any extra revenue generated used to subsidise insulation, etc.   I think that will be more effective and also more likely to happen.  It won't be popular though ... 

Controversial 😆 


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 Kev M
(@kev-m)
Noble Member Member
Joined: 5 years ago
Posts: 1276
22/06/2021 9:33 am  

@editor , it was meant to be 😉 



   
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Jeff
 Jeff
(@jeff)
Prominent Member Member
Joined: 5 years ago
Posts: 562
22/06/2021 10:00 am  

A few personal thoughts

I suspect by law some of the levy needs to stay with electricity for now, e.g. some carbon costs, AAHEDC etc, else the government may end up in court. We still have a lot of carbon electricity generation in the short term. We may yet find the Biomass generated electricity from the Drax etc. power stations becomes internationally unacceptable in a few years years as well which may complicate things. 

Others costs could reasonably be split across gas and electric, and some loaded more on gas I think. 

Having a levy similar to VAT on energy bills  may simplify things, say 10% and this would mean there wouldn't need to be any tweaking in the gas vs electric levy going forward as things evolve. Simply remove the current separate gas and electric levy. This would reduce the costs of running an ASHP and increase the cost of gas heating. 

I suspect we will always need a levy even when gas goes completely so I don't think moving all the levy to electricity is realistic. We have a similar issue with electric cars in a few years, they will have to bring in road pricing or something similar for electric cars to pay for roads and contribute to general taxation as the tax collected on petrol plummets. Although the cost of buying an electric car will fall, the cost of running one will increase at some point with road pricing. 

I agree increasing the levy generally would help fund a faster switch and I would like to see that as well as whatever they do with switching some or all the current levy.

ECO is the current biggest levy cost and this seems a good one to switch. In the past and even now it is used to install gas boilers and gas central heating in homes with only electricity. We haven't yet got to the point where the ECO is being used for taking out gas primarily due to the high upfront cost of retrofitted ashp. ECO is all about fuel poverty rather than the environment in reality at the moment although it does cover insulating. Am sure this will change at some point. 

The Environmental and social obligation costs on utility bills include:

Carbon Certificates,

Carbon Price Floor costs,

Energy Company Obligations (“ECO”),

Renewable Obligation Certificates (“ROCs”),

Warm Home Discount,

Levy Exemption Certificates (“LECs”),

Feed in Tariffs (“FiT”),

Assistance for Areas with High Electricity Distribution Costs (“AAHEDC”).



   
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 Mike Patrick
(@mike-patrick)
Reputable Member Member
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Posts: 188
23/06/2021 10:04 am  

The contradiction in energy pricing is that the high price of electricity relative to gas is the opposite of what is needed to encourage customers to switch. However, for those that have done so, it is a great motivator to use it sparingly. I am far more focused on my daily energy usage now than I ever was with gas central heating.

It will always be a hard sell to consumers - spend a lot of money to switch to a heating solution that may not be cheaper to run than your existing one.


Grant Aerona HPID10 10kWh ASHP


   
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Mars
 Mars
(@editor)
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Posts: 4298
Topic starter 26/06/2021 5:51 am  

@mike-patrick, I wholeheartedly agree. The issue, however, is that we were sold an ASHP that promised to run cheaper than oil and LPG, which it has until now. Electricity tariffs are always on the rise. Oil and LPG may be volatile in terms of spikes, but they always seem to settle down in the sweet spot. Something similar needs to happen for electricity used for heat pumps in particular.


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 Mike Patrick
(@mike-patrick)
Reputable Member Member
Joined: 5 years ago
Posts: 188
26/06/2021 6:15 pm  

@editor I recently corresponded with Baroness Brown (Climate Change Committee). She agreed that the pricing of electricity relative to oil and gas needs to change if people are to be encouraged to switch to heat pumps. She and the Committee have some influence with government so let's hope they can bring the requisite pressure to bear.

 

Mike


Grant Aerona HPID10 10kWh ASHP


   
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